German consumer expectations improve again

BERLIN 
German consumer expectations for May have improved for the second consecutive month, reflecting hopes for a stronger recovery, the survey institute GfK said Tuesday.

Both economic and income expectations have increased considerably in Europe's biggest economy, although the propensity to buy fell marginally, according to GfK's latest survey.

The GfK's overall indicator forecasts a value of 3.8 points in May this year, following a revised value of 3.4 points in April.

"There are increasing signs of a recovery in the German economy, and consumers are becoming more aware of this, as their greater economic optimism shows," GfK said in a statement.

In March, the Nuremberg-based GfK had recorded a value of 3.2, when it had fallen for a fifth consecutive month, as consumers worried about jobs and the implications of the debt crisis in other European countries, like Greece.

Even as the Greek debt crisis still looms large, German consumers are relieved by a domestic economic recovery, the GfK said.

The indicator reflecting economic expectations has recorded an increase of 18 points and now stands at 22.5, which represents a gain of almost 54 points in a year-on-year comparison.

The upward trend in Germany and the upsurge in global trade suggests "that the German economy has now moved past the crisis and is gradually working its way out of the deepest recession since the postwar period," it said.

The German government last week reiterated its forecast that the country's economy will grow by 1.4 percent this year as exports recover, and predicted slightly faster growth of 1.6 percent in 2011.

The economy returned to modest growth in last year's second quarter but still contracted by a savage 5 percent for the whole of 2009 - by far the worst performance since World War II. It stalled in the fourth quarter.

GfK also sees a stabilizing trend for the labor market, largely thanks to increased exports.

Leading German research institutes said in their most recent forecast that the average unemployment figure could be slightly lower this year than in 2009.

The Economy Ministry estimates that the number of people out of work in Germany, a nation of 82 million, will average 3.4 million both this year and next - the same number as last year. In March, more than 3.5 million were registered as unemployed, for a jobless rate of 8.5 percent.

Unemployment has been tamed in part by a government-backed program that allows companies to put workers on reduced hours in an effort to avoid layoffs.